Crack the productivity puzzle
22 August 2016
The introduction of the National Living Wage this April and rising concerns over the future of the UK labour pool following Brexit have revealed an urgent need for higher levels of productivity within the DC. Matt Hatson, Business Solutions Sales Director, Dematic Northern Europe explains.
UK businesses are under tremendous pressure to perform – and the challenges are becoming tougher. Customers are ever more demanding, wanting later and later cut-off times for next-day deliveries, margins are becoming tighter as competitive positions harden, and labour costs are on the rise.
The introduction of the ‘National Living Wage’ in April, which increases the labour rates for those over 25 years old to a minimum of £7.20 per hour, has added to the cost burden of labour intensive distribution centre operations. And now Brexit has cast a shadow over the future availability of abundant labour resources from Europe.
How can businesses offer customers what they want within the constraints of higher costs, a reduced labour pool and tighter margins? Pushing back cut-off times for next-day deliveries may secure competitive advantage but with it comes shorter processing times for fulfilment operations. The answer to these pressing issues lies in tackling low productivity.
There is a huge gap between productivity levels in the UK and those of other G7 economies. According to the Office for National Statistics international estimates of productivity in 2014 revealed that output per hour in the UK was now 36 percentage points behind Germany, 30 points below the US and is trailing France by 31 points.
Until recently, many businesses may have reasoned that it was unnecessary to invest in productivity enhancing technology if labour was so cheap. However, that scenario is clearly changing.
High availability of flexible, low-cost labour has allowed low-productivity business models to survive in the UK - but for how much longer? If retailers and manufacturers are to grow their businesses, and still offer customers what they demand in terms of service, then productivity must be significantly improved and that comes down to introducing higher levels of automation to boost the productivity levels of those individuals working in the distribution centre.
Adopting automation need not require radical change. Flexible and scalable solutions are available that offer a fast payback.
Technologies such as Dematic RapidPut, Dematic RapidPick XT and Dematic Pouch Sorter offer scalable solutions for businesses as they grow.
RapidPut brings together ‘Put Walls’, conveyors and light or voice technology in an integrated solution capable of meeting the heavy demands of omnichannel fulfilment - even at seasonal peaks.
The intelligent Dematic iQ software behind RapidPut considers picking and putting as part of a continuous integrated process, creating a dynamic batching solution without the need for a picking buffer. In effect, it is a wave-less or endless batching system that removes the requirement for sortation equipment.
Then there is the Dematic RapidPick XT robot, which can consistently pick up to 1,200 items per hour, creating orders to totes or perhaps building mixed pallet loads for applications such as store friendly sequencing.
Also, Dematic’s overhead pouch sortation system offers a super-flexible and highly scalable, dynamic buffering solution based on a hanging pouch design. The pouch sorter allows you to pick a batch in advance, buffer it and then bring items down to individual packing stations in strict order sequence, so facilitating the fast and efficient despatch of single or multiple items.
Developed for the fashion retail sector, but with significant operational benefits for a much wider range of applications, the pouch sorter can carry both hanging items and boxed product and is perfect for temporarily buffering returned items ready for fast re-despatch with the next order.
Dematic’s Multi-Shuttle systems too, are often used to buffer totes and release them to despatch lanes in sequence.
Importantly, automation not only boosts productivity, but it also reduces error rates too, so costs and actions associated with rectifying mis-picks and dealing with disappointed customers are reduced.
Demonstrating how flexible automation can significantly boost productivity, at Coop Denmark Dematic’s MultiShuttle technology has been linked to Dematic’s RapidPick intelligence to create a fast, reliable and scalable goods-to-man picking operation that has dramatically increased productivity from 140 to 450 items picked per hour.
Using technology wisely and proportionately can deliver the results needed to solve the productivity issue. The opportunity is there for the taking.
Matt Hatson is Business Solutions Sales Director - Dematic Northern Europe